Wireless communications carriers have become much tougher on equipment space rental terms for tower sites, according to Bob Paige, senior vice president for mergers and acquisitions at Vertical Bridge, a private tower company based in Boca Raton, Florida.
“We focus on towers in our business, but also data centers and small cells,” he said. “We are, I think, the largest private tower company today.”
Paige spoke at a conference session about privately owned tower companies at the Connectivity Expo convention conducted by the Wireless Infrastructure Association in Charlotte, North Carolina. “Vertical Bridge is seeing increased rental activity from AT&T Mobility and, surprisingly, from Sprint,” he said. “I would tell you their terms have certainly gotten a lot tighter, whether it’s pricing, whether it’s reserve loading or whether it’s escalators. They’re certainly a lot tougher on terms than they were a few years ago when they were active last time.”
AT&T Mobility and Verizon Wireless not only have expressed dissatisfaction with rental rates. They took action last year to have alternative tower sites constructed on their behalf with the potential for moving equipment from towers they now lease to the new towers. Tower-owning companies such as Vertical Bridge may be responding by negotiating new rates.
“Once we set the new paradigm, we set the new pricing, we set the new loading, we set all the other terms and conditions, I think we’ll go back to business as usual,” Paige said. “Something to notice is that the wireless carriers are doing this at a time when they haven’t been very busy. They’re focused on it because they have resources. Once they get busy, this won’t be off the table because they’ve got to produce. With FirstNet and the AT&T build-out, they’re going to not focus on terms. They’re going to want speed-to-market real soon. When you start seeing 5G rollouts, the wireless carriers all will focus on that. In its build-out, T-Mobile certainly has started to focus on just getting things done. We’re at this paradigm shift in a time when we’re shifting terms. But once we set those, I think it’ll be a new business as usual.”
FirstNet is the First Responder Network Authority, a federal agency to which Congress gave the responsibility to construct, operate and maintain a nationwide public safety broadband wireless network. FirstNet contracted with AT&T to build the network, and AT&T has been using many of its existing facilities, including the towers it rents, to fulfill the contract.
Paige had praise for T-Mobile US, saying it had done an incredibly good job of moving TV broadcast stations from the 600-MHz spectrum the wireless carrier bought in FCC auctions. He said that three years ago, when it became obvious that the FCC would schedule the auctions, T-Mobile started talking with broadcasters to make sure they could exit the spectrum in a timely manner.
Announced about three weeks before the conference at which Paige spoke, the intended merger of T-Mobile and Sprint requires approval by the FCC and the U.S. Department of Justice (DoJ). Paige said that if the merger had been announced three or four weeks earlier, he would have given it no chance of obtaining approval.
Paige recalled when the DoJ turned down the AT&T and T-Mobile merger in August 2011 and issued a 16-page document explaining its position. He said when he plugged the metrics of the Sprint and T-Mobile merger into the document’s calculations, the merger looked even more anti-competitive by the Herfindahl-Hirschman index measure of market concentration. “That’s why I took a purely objective view, and I would have said there was no way the DoJ would approve the Sprint and T-Mobile merger,” Paige said.
But he said T-Mobile has done a masterful job of marketing the merger.
“They painted the future,” Paige said. “They said, ‘Don’t just look at today. Look at how this business will look three years, five years, 10 years down the road, and the amount of investment we have to make. It’s two separate companies.’ That’s resonating. We’re not seeing a public outcry against the merger. We’ve had a number of the FCC commissioners go on record as saying they are actually for it. The only uncontrollable force out there that may thwart this is the DoJ.”
Paige said the two companies might have to compromise with the DoJ to obtain approval, and such a compromise could involve spinning off Sprint’s Boost Mobile subsidiary, divesting some radio-frequency spectrum or possibly some anticompetitive markets.
Regarding the pending merger of T-Mobile and Sprint in which T-Mobile would control the resulting combination, Paige said he sees opportunity.
“Let’s assume that the merger goes through and T-Mobile decommissions all 35,000 sites,” Paige said.” We don’t have that many sites with Sprint today. And they’re going to put 10,000 new sites up and they’re going to favor private tower companies. We’re good. We would be net positive if they do that. Having a third healthy carrier that is growing is much better than having four, with two that do not have enough free cash flow to invest in 5G wireless communications. I won’t say T-Mobile and Sprint are not healthy, but they don’t really have the cash flow today to invest in 5G.”
Holding out the prospect that after the merger reduces the count of national carriers to three, a fourth network could start, Paige said: “At some point the FAANGs — Facebook, Amazon, Apple, Netflix and Google — have to do something.”
Paige referred to Dish Network, too, mentioning that its chairman, Charlie Ergen, spoke at the convention to say Dish would build a nationwide network for low-capacity internet-of-things service. He also mentioned cable TV companies as possible fourth network operators.
“Comcast is in the wireless business, whether they know it or not,” Paige said. A mobile virtual network operator doing business as Xfinity Mobile, Comcast uses the Verizon Wireless network to serve its 380,000 customers. Paige said if Xfinity signs up 2 million more subscribers next year as planned, Comcast will need the economic advantage of a network owner, sooner or later. He said Comcast could not keep using Verizon’s network and make a profit.
Whether or not a fourth network starts up after the T-Mobile merger with Sprint, Paige said he expects the near-term effect of the merger to be positive because the merged company’s growth will provide enough business to exceed what will be lost from decommissioned sites.
Vertical Bridge Buying Towers
Vertical Bridge has been a prolific buyer of towers during the past four years, Paige said. “As we are underwriting today, we are giving careful thought when Sprint is a tenant on a tower,” he said. “We have to perform a deeper-dive analysis to figure out whether Sprint is a long-term tenant. We would be acting irresponsibly, if we didn’t.”
On April 18, AT&T and Crown Castle signed an agreement simplifying and expanding their long-term leasing deal for wireless network infrastructure. “Everyone sort of skeptically looked at Crown’s strategy of moving into fiber, and this agreement is the perfect example of where it plays out really well for them,” Paige said. “They’ve extended the conversation with the customers that say, ‘I don’t just talk to you about macros anymore. I talk to you about your network.’ From a strategy perspective, Crown has done a great job of being able to expand the conversation with the customer.”
The Role of Small Cells
Paige said if state governments enact small cell legislation that adheres to the model the Wireless Infrastructure Association recommends, it will be good for the wireless industry. As long as the legislation does not choke the playing field to one technology — small cell versus macro — he said he is on board with it. Paige sees possible trouble with what he calls scope creep, in which legislation defines the size of the antenna structure large enough that small cells begin to approximate macro towers. He said small cell legislation will expedite the rollout of the greater coverage and lower latency that wireless communications users look forward to with 5G.
Small cell is a different business, Paige said, because the value-add is not the node, and it is not the small cell. He said the value-add in that equation is the fiber and managing a network, and a network requires more resources, more people, to manage it than macro sites do.
“We wrestle with small cell decisions as to whether we should stick our toe in some of the small cell things that come our way,” Paige said. “We always take a step back and say if it’s node only, where Verizon is going to build a fiber and we only have to put the pole up, that’s a great business for us. But if they really want a small cell solution, if Verizon or T-Mobile comes to us with a small cell solution, we should let our sister company do that because we don’t really have the technical expertise to handle it.” Digital Bridge owns Vertical Bridge, and it owns ExteNet Systems, a company that builds and owns distributed network systems, of which small cells can be a part.
Revenue from 5G?
Although some speak of the release of standards and the introduction of equipment as leading to 5G deployment, Paige said he believes it will depend more on market demand. He cited estimates of $175 billion to $275 billion to be spent deploying 5G network equipment, and it isn’t obvious to him how this investment will generate another dollar of revenue. “You have to figure how you’re going to generate the revenue to pay for that $200 billion-plus of investment before you actually deploy it,” he said.
“The equipment manufacturers would have you believe that you have to spend the money to drive the innovation,” Paige said. “But I don’t think you’ll go whole-hog on leading with a speculative build before you have some reason to believe it creates some revenue.”
With respect to Paige’s area of focus — mergers and acquisitions — he said acquiring more towers for Vertical Bridge is a matter of supply and demand.
“There’s just not a whole lot out there anymore, and so we’re sort of grabbing from the bottom of the barrel,” he said. He said when towers haven’t had previous ownership changes, there probably is a reason that could be related to problems with documentation, regulation or environmental considerations. “As we get into due diligence with these towers, we’re seeing things we didn’t see several years ago, and you’re seeing it more often. The increased level of due diligence is really a function of supply and demand. There are just not that many transactions these days. What you’re seeing are more challenged transactions.”
The next Connectivity Expo is set for May 20–23 in Orlando, Florida.
Edge computing is becoming part of the network conversation as more companies go public with their solutions for wireless communications. Placing data center infrastructure, i.e. content, at the edge of the network will give immediate access to the internet to billions of mobile devices, such as smartphones, medical devices, industrial controls and IoT sensors.
But that vision of the future goes out a few years.
What carriers need right now is a way to cut their backhaul costs which have risen because of the increased traffic caused by unlimited data plans, Greg Pettine, founder and EVP of business development, said in a phone interview with AGL eDigest.
“The [carriers] know that if they can get some of the content out beyond their core data centers out to the wireless edge, they can significantly maintain their operating expenses regarding fiber to the tower. That’s big,” Pettine said.
Also important to today’s carrier operations is the performance of the network, which can be negatively affected by traffic congestion. “The [carriers] have admitted to throttling back users of certain applications, such as YouTube, Facebook, Netflix and Amazon,” Pettine said. “This results in churn, which they don’t want to happen.”
EdgeMicro’s answer to the traffic congestion problem is to locate the data from these websites in a micro datacenter positioned at the cell site or a central office or a mobile telephone switching office. Then, when a data request comes into the tower, the system redirects it to the micro datacenter to get the data, instead of backhauling it to the regional data center.
The organizations may take advantage of storing data in a micro datacenter because they are the ones driving the most content across the internet. Those companies including Facebook with Facebook Live; Instagram; Google with YouTube, Akamai Technologies, which is used by the ad networks; Amazon and Netflix.
Data traffic in EdgeMicro’s network-neutral micro data centers is managed by a technology known as Tower Traffic Xchange (TTX), which is a Local IPAccess (LIPA) solution that combines all the necessary LTE network components into a single, low-power, collocated appliance.
EdgeMicro gave a preview of its TTX and micro data center at the Competitive Carriers Association’s (CCA) Annual Convention earlier this year in Fort Worth.
The company’s medium-term plan is to deploy at 500 tower sites in the next five years. First, 30 micro datacenters will be deployed at busy multi-tenant towers that serve 100,000 people in the next 18 months in tier-two cities, which don’t have a lot of backhaul, content or ISP peering.
“That will provide us with the data to proliferate our micro datacenters,” Pettine said. “EdgeMicro’s prefabricated micro data centers will be deployed at ultimately thousands of cell towers globally.”
EdgeMicro’s collocation model is based on an 8-foot by 20-foot container with six racks. A quarter rack would be sold to each content provider, which works out to 24 customers in each container.
“We are in various stages with the [carriers], introducing it into their labs for testing. Ultimately, they need to start field test the acquisition of data,” Pettine said.
Micro Datacenters: Good for Towers?
What is in it for tower companies? Providing micro datacenters will make towers stickier, reducing carrier churn. Tower companies would make good strategic partners and could fund the effort as an alternative cash flow.
“Tower companies get increased rent and have the potentially to be strategically aligned in bringing in innovative cash flow,” Pettine said, “But they don’t know anything about data centers and that is where we come in. We understand the collocation model from a datacenter perspective: the cost-to-build and opex.”
Tower companies have already shown an interest in micro datacenters. For example, Crown Castle International is a minor investor in Vapor IO, whose Project Volutus enables cloud providers, wireless carriers and web-scale companies to deliver cloud-based edge computing applications via a network of micro data centers deployed at the base of cell tower sites.
“The cloud of the future will extend past today’s large, centralized data centers. The next generation cloud will follow your car. It will follow your phone. It will follow your sensors. It will be distributed and data driven and everywhere,” Alan Bock, vice president of corporate development & strategy, Crown Castle.
Vertical Bridge announced in late September that it has partnered with its sister company DataBank to host edge computing at the base of cell towers. Additionally, AT&T has announced it also has micro datacenter plans.
One pundit has claimed that the Cloud is “dead.” While that may be an overstatement, the global market for micro data centers is certainly alive and projected to be $8.47 billion by 2022, according to a report on MarketstoMarkets Research.
J. Sharpe Smith and the senior editor of the AGL eDigest. He joined AGL in 2007 as contributing editor to the magazine and as editor of eDigest email newsletter. He has 27 years of experience writing about industrial communications, paging, cellular, small cells, DAS and towers. Previously, he worked for the Enterprise Wireless Alliance as editor of the Enterprise Wireless Magazine. Before that, he edited the Wireless Journal for CTIA and he began his wireless journalism career with Phillips Publishing, now Access Intelligence. Sharpe Smith may be contacted at: [email protected].
States opting in for the First Responders Broadband Network (FirstNet) surged past the halfway point earlier this month, with the addition of Pennsylvania, Oklahoma and Utah. Even with the momentum FirstNet is gaining, the tower industry is still uncertain of when or where the buildout will occur.
For now, 29 states and two territories have signed on. States that haven’t already opted in have until Dec. 28 to make their decisions.
With an opt-in decision, first responders can begin signing up for service, and thousands of connections on the network. First responder subscribers will have priority access to interoperable voice and data across the existing nationwide AT&T LTE network.
Both AT&T and FirstNet have committed resources to improve public safety communications. With each opt-in decision, FirstNet and AT&T bear the financial risk associated with the network build in that state or territory. FirstNet will also drive public-safety-focused infrastructure build out first on existing towers through modifications and then through collocations. And eventually through new builds.
“We expect to hit the ground running and issue work orders in January after the opt-in period closes. We’ve already committed more than $200 million in capital to the project in preparation for its start,” John J. Stephens, AT&T CFO.
“The needs of public safety demand more than what commercial offerings provide today. FirstNet will be a force for good, forever changing the way first responders think about and use communications,” said Chris Sambar, senior vice president, AT&T – FirstNet.
The 31 states and territories that have opted in, including Alabama, Montana, Alaska, Nebraska, Arizona, Nevada, Arkansas, New Jersey, Hawaii, New Mexico, Idaho, Oklahoma, Indiana, Pennsylvania, Iowa, Puerto Rico, Kansas, South Carolina, Kentucky, Tennessee, Louisiana, Texas, Maine, U.S. Virgin Islands, Maryland, Virginia, Michigan, West Virginia, Minnesota, Utah and Wyoming.
“We’ve had a tremendous response [to the FirstNet opt-in process] so far. Already, 31 states and territories have opted in, and we are just a month into the 90-day opt-in window,” Stephens said.
AT&T must meet a timeline of 20 percent geographic coverage annually starting in April 2018, until it is finished.
“So we do think this is going to be constructive to the tower industry next year and for many years to come,” James Taiclet Jr., American Tower president, CEO and chairman, said in a Q3 2017 earnings call. Daniel Schlanger, American Tower CFO, also expressed his optimism about the potential for growth associated with FirstNet.
Smaller Tower Companies Less Optimistic
During the AGL Local Summit in Fort Worth last month, Ron Bizick, CEO of Tarpon Towers, said that FirstNet is currently the biggest catalyst for growth on the horizon for towers but the speed of the process has not been without some frustration. The large public tower companies stand to benefit the most, he added.
“It is slow coming. We all expected more activity sooner, but it is coming,” Bizick said. “From a revenue standpoint, Crown Castle International will benefit the most, because they have the AT&T portfolio, followed by the rest of the public tower companies. You can kill the most birds with one stone by going to the [bigger tower companies], if you can get a good deal done.”
Bizick has seen applications for tri-band antennas that would utilize the AWS, WCS as well as FirstNet frequencies. “What that suggests is that AT&T, true to its mission, is going to deploy one time, one truck roll,” he said. “It looks like they will have equipment deployed in the field ready to be turned on when a state opts in.”
AT&T plans to roll out FirstNet service to around a total of 45,000 towers, with 15,000 seeing new equipment in the first five year. There will be plenty of room for negotiation between AT&T and the public safety agencies concerning where that buildout occurs, according to Bizick.
“The public safety agencies will want coverage where they current don’t have it, and AT&T wants to deploy coverage where they don’t have to build towers,” he said. “I think the mixture should include coverage where there it currently is not available to public safety.”
Bernard Borghei, co-founder of Vertical Bridge, sees FirstNet as the last, best hope of getting broadband wireless deployed in rural areas. Collocating on existing towers will be essential for AT&T to achieve a return on its invest on its investment.
“A lot of us have rural towers and there is the possibility for a partnership there. We have a healthy relationship with AT&T. It is a timing issue. How aggressive they will be; how fast they will deploy; I don’t know,” Borghei said.
Collocating FirstNet Antennas May Not be That Simple
Not surprisingly, the FirstNet antennas covering multiple spectrum bands are bigger than the LTE ones.
“They are trying to go with one antenna per sector. Under Rev. H [of ANSI/TIA 222), the new tower engineering standard, a lot of the mounts are going to be stressed with the FirstNet antennas,” Borghei said.
Tony Peduto, CTI Towers CEO, said AT&T is looking for additional height beyond the standard 10 feet in the FirstNet rad centers, which may lead to reconfiguring the tower. He was not confident, however, that the Dec. 28 deadline for states to opt-in would hold.
“You have Oregon and Washington with a joint RFP out there which is due in mid-November. With the holidays, I think you are going to see an extension of time granted for states to opt-in as they try to figure it out,” he said. “It’s a tailwind. Just a matter of when.”
States opting out could lead to a FirstNet network with multiple providers, Peduto said
“A network will be built, but it may mean multiple players. Verizon has gone to states and lobbied them to build their network. Ultimately you are still going to need interoperability across the country, even if has Verizon in Washington state and AT&T in Oregon. I am not sure what it will look like in the end.”
To support Puerto Rico as it continues its recovery efforts from Hurricane Maria, Vertical Bridge, the largest private owner and manager of communication infrastructure in the United States, announced that it will make a $100,000 donation to One America Appeal through its philanthropic program, the Vertical Bridge Charitable Network (VBCN).
Funds from One America Appeal are being distributed to Unidos Por Puerto Rico, which is providing much needed water, food, hygiene products, and other supplies to those affected by Hurricane Maria.
“Hurricane Maria’s impact on Puerto Rico is unprecedented, and it will take a tremendous effort to recover,” said Alex Gellman, CEO and Co-Founder of Vertical Bridge. “Being based in South Florida, we’re very fortunate that Hurricane Irma was not worse for us. However, our fellow citizens in Puerto Rico were not so lucky, which is why it’s important to us ‒ and our employees ‒ that we support the island’s recovery in whatever way possible.”
Vertical Bridge has a history of supporting natural disaster relief efforts including those involved with Hurricanes Matthew, Harvey and Irma, as well as areas of South Georgia and Northern Florida that have experienced significant tornado damage. The company operates in many of these regions and often works with various local businesses to build and manage its telecommunications infrastructure.
In addition to its $100,000 donation to One America Appeal, VBCN is also matching any employee contributions to the relief efforts. By year’s end, VBCN expects to have donated over one million dollars to various philanthropic organizations, all of which were chosen by Vertical Bridge employees or clients.
In 2013, Marc Ganzi stood at a crossroads. His company Global Tower Partners had sold its towers to American Tower. Although he could have continued to specialize in cell tower development, an area in which he had been immensely successful, Ganzi instead opted to diversify and invest in the entire communications infrastructure (“comm-infra,” as he calls it) ecosystem.
“There has to be an understanding of your customer, and there has to be a belief that the way we have done things in the past does not necessarily predicate how we will do business in the future,” Ganzi told AGL Magazine in an interview during a tour of the company’s headquarters in Boca Raton, Florida.
He cofounded Digital Bridge Holdings, and since then, the company has made good on that vision by investing in distributed network systems, small cells, fiber optics, data centers and interconnection services, along with macro cells, both domestically and internationally.
Tower Industry at a Crossroads
Now, it is the tower industry that stands at a crossroads. In serving wireless carriers, the industry must embrace change to remain relevant to its customers, according to Ganzi.
“The winners in the successful ownership and management of wireless infrastructure in the next 10 years will be the ones that understand what the customer wants from a deployment partner,” Ganzi said.
Today, smartphones have become an essential hub of people’s lives, from executing banking and other business transactions, such as reading work emails, to listening to music, watching videos, and communicating with peers through social media. Advancing consumer needs for data puts a lot of pressure on the hardware (or mobile device) to perform, Ganzi said.
— Jeff Tobe, author of Coloring Outside the Lines
To remain relevant, the tower industry needs to take a more holistic view of the carriers’ wireless infrastructure connectivity needs, Ganzi said. Delivering this needed bandwidth requires new investment. The industry will need to cross five different points of presence: macro sites, small cells, distributed network systems, fiber and highly secure radio access points (or data centers).
“As it becomes more in focus, it is less about the towers and more about the fiber-fed infrastructure and how you connect the various points of presence and ultimately to the radio access room to the content and where you tie into the cloud,” Ganzi said.
Along with investing in macro towers through Vertical Bridge, Mexico Tower Partners and Andean Tower Partners, Digital Bridge has moved in a number of different directions. In the fall of 2015, Digital Bridge entered the business of designing, building, owning and operating distributed fiber-fed networks for use by wireless carriers and venue owners by leading a $1.4 billion recapitalization of ExteNet Systems. It quickly followed up that deal with a bolt-on to ExteNet when it purchased Telecommunications Properties in May of 2016. The company designs, builds and operates distributed antenna system and small cell networks inside high-profile venues. As of June 2017, the business owned and operated more than 350 networks, 16,300 nodes and 3,200 miles of proprietary fiber.
Digital Bridge then completed the convergence cycle when it entered the enterprise-class data center business by acquiring DataBank in July 2016. DataBank then quickly made two acquisitions, buying select 365 Data Center assets in Pittsburgh and Cleveland and picking up Utah-based C7, which owns and operates three facilities in Salt Lake City. With new facilities under construction in Atlanta and a third asset in Dallas, DataBank will have 13 properties nationwide. Not done there, Digital Bridge decided to enter the hyperscale cloud storage data center business, buying one of the largest providers of wholesale enterprise data centers: Santa Clara, California-based Vantage, from SilverLake Partners. Today, Digital Bridge owns and operates more than 16 data centers, with five assets under development and construction across the United States. Digital bridge has invested nearly $2 billion in the sector.
Vertical Market Opportunities
Digital Bridge’s investment in ExteNet increased its access to the verticals (customers with specialized needs) across enterprise wireless, which includes enhancing coverage in key sports and entertainment venues, medical, higher education, hospitality and commercial office buildings.
“We approach each of those verticals differently,” Ganzi said. “Sports/entertainment was a huge strength at Telecommunications Properties, and we continue to book victories there with an integrated approach under the ExteNet flag. In medical, we are just scratching the surface. We’ve had a couple of universities — University of Texas, Auburn and University of Michigan. Those are tough networks to build because the carriers have not taken them yet, but in time, they will. The need is just too compelling from a consumer, research and higher-education need.”
The Next Frontier
Digital Bridge’s companies have deployed in more than 200 commercial office buildings and hotels. The goal is to continue to find cost-effective solutions for the smaller indoor venues. “Hospitality is fertile ground, and we continue to invest there,” Ganzi said. “Finding solutions for hotels with fewer than 400 keys is critical, just as it is for office assets sub-500,000 square feet. Then, the next frontier or pain point in the network will be solutions for hotels with fewer than 150 rooms and office space less than 100,000 square feet.”
ExteNet is heavily involved in the commercial office building segment and has exclusive access rights to more than 180 office properties. Networks will be deployed within those buildings where there is sufficient carrier demand. Where the economics don’t support deployment in an office building, the solution may be to connect multiple buildings at once. Digital Bridge has been working on creating these wide-area, in-building networks in multiple commercial office buildings.
“If you can build a significant collocation facility in one building and connect it over fiber to five other buildings, it can make the economics work,” Ganzi said. “You can provide the ‘meet me rooms’ for all the fiber companies to get access to those buildings, provide enterprise-based wireless solutions for the tenants in the buildings, mobile connectivity for the major carriers, then you layer in Wi-Fi and public safety and you have created a really unique network that achieves the objectives of all constituents involved and saves everyone cost — this is the true shared telecom infrastructure model. It is something we are spending a lot of time on.”
One-stop Infrastructure Shop
The original business plan for Digital Bridge was to provide multiple ways to serve its carrier relationships in the mobile infrastructure space by having separate platforms to invest in the distinct components that make networks function at a high level, while also making use of all of the businesses to work in concert to deploy integrated solutions for customers. But at this time, carriers are not looking for a one-stop shop for all their infrastructure needs.
“I don’t think the carriers wake up every day and think about how to converge their networks,” Ganzi said. “Carriers do not see infrastructure as a holistic real estate cost — yet. I want to emphasize that word ‘yet’ because I believe they are beginning to. U.S. mobile carriers — AT&T, for example — now look at what portion of their costs are related to delivering the customer experience as a total cost per byte. The real question for us as a supplier to AT&T is, ‘How can we deliver a good value proposition that is seamless and easy for the carrier, while lowering their total cost of bandwidth delivery?’”
Digital Bridge does business with AT&T across multiple platforms, including macro sites, small cells and data centers. “We continue to probe them about how else we can help them — where we can reduce costs and speed up velocity,” Ganzi said.
Being diversified helps Digital Bridge command a more senior audience at the carriers, Ganzi said. Its portfolio of 6,800 towers, 18,000 nodes and 3,200 miles of owned fiber can fulfill the carriers’ needs in a number of ways.
“We can be a relevant partner to carriers,” Ganzi said. “We can help them achieve their objectives, which are inevitably: densification, capacity, coverage and cost synergies across the entire mosaic of our infrastructure.”
The 5G Future
With carriers attempting historically unheard-of data speeds and low-latency parameters, the pressure will be on wireless infrastructure to do things differently than it has in the past — or it won’t happen.
“I am the eternal optimist, and I see a lot of promise in the future of network deployments,” Ganzi said. “The promise of 5G will only be met if we as an industry can answer the bell on infrastructure in a way that is cost-effective, where the customer receives good value and the network gets delivered on time, and it performs well.”
The next generation of wireless networks will need many types of communications assets, from macro cells, small cells and DAS to fiber optics, centralized radio access networks (C-RANs) and data centers. Digital Bridge is intent on amassing a variety of assets to serve all carriers’ needs, as well as cloud and content players. It shares space in its airy, understated offices in Boca Raton with Vertical Bridge, which has accumulated assets in buildings, rooftops, utility attachments and macro cells, all as part of a turnkey real-estate communications solution.
“I take it personally when people call us a tower company,” said Bernard Borghei, senior vice president of operations and a cofounder of Vertical Bridge. “We are no longer a tower company. We are a real-estate solution provider. We have all these different types of assets to meet the demands of today’s advanced technology leading into 5G and beyond.”
Even the real estate under suburban towers may come in handy as locations for micro data centers as wireless providers push their data centers closer to the edge of the network, according to Alex Gellman, CEO and a cofounder of Vertical Bridge. “If C-RAN is to be located at specific sites, we look at marketing the land under our sites for a C-RAN hub,” he said.
Outside the lines
During its short history, Digital Bridge has made six investments, including two in data centers, giving it $6.8 billion in assets under management. Ganzi seems to relish taking his formula of “fast, flexible and friendly” and pushing it outside the border of the tower industry and beyond the border of the United States.
“We have come a long way in our 24 years of doing this, but by no means have we perfected anything,” Ganzi said. “We are still learning. That is the fun part. We believe if you have a great market opportunity, great management teams and you seed them with the requisite capital, infrastructure, back office and discipline, it will accrete to a good investment and return for our investors.”
J. Sharpe Smith is senior editor of the AGL eDigest. He joined AGL in 2007 as contributing editor to the magazine and as editor of eDigest email newsletter. He has 27 years of experience writing about industrial communications, paging, cellular, small cells, DAS and towers. Previously, he worked for the Enterprise Wireless Alliance as editor of the Enterprise Wireless Magazine. Before that, he edited the Wireless Journal for CTIA and he began his wireless journalism career with Phillips Publishing, now Access Intelligence.